Indian Oil Offers 10-Year Notes as Bond Risk in Asia DeclinesDavid Yong
Indian Oil Corp. is marketing 10-year dollar-denominated bonds as credit risk in Asia declines.
India’s biggest refiner plans to price the securities to yield about 6 percent, according to a person familiar with the matter, who asked not to be identified because the terms aren’t set. Korea Gas Corp., the world’s biggest buyer of liquefied natural gas, sold $500 million of five-year notes yesterday, attracting $6 billion of orders, a separate person said. The cost of insuring corporate and sovereign bonds in the Asia-Pacific region against non-payment fell to an almost seven-week low, according to traders of credit-default swaps.
Bids exceeded the amount offered by 12 times for the Korea Gas notes, compared with the 1.9 times received by high-yield issuer PT Multipolar Corp. when it sold $200 million of five-year bonds on July 18. Investors in Asia outside Japan bought 44 percent of the Korea Gas notes and fund managers took 66 percent, the person familiar said.
“We went through two months with very minimal U.S. dollar supply and it’s natural for fund managers to focus on quality at this point,” said Mark Reade, a Hong Kong-based credit analyst at Credit Agricole CIB.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan dropped 1 basis point to 126.5 basis points as of 9:22 a.m. in Hong Kong, Westpac Banking Corp. prices show. The gauge has declined 51.3 basis points from its highest level this year reached on June 24, and is heading for the lowest close since June 5, according to data provider CMA.
The Markit iTraxx Australia index dropped 3 to 113 as of 10:05 a.m. in Sydney, National Australia Bank Ltd. prices show. The benchmark has plunged 36.5 from its 2013 peak last month, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.
The Markit iTraxx Japan index was unchanged at 92 basis points as of 8:48 a.m. in Tokyo, Citigroup Inc. prices show.
Credit-default swap indexes are benchmarks for insuring bonds against default and traders use them to speculate on credit quality. A drop signals improving perceptions of creditworthiness, while an increase suggests the opposite.